KUALA LUMPUR: What do you need to know when trying to live in KL on a shoestring budget?

There is no escaping the fact that many ordinary Malaysians feel the pinch of the higher cost of living nowadays. Many would readily agree that living in the Klang Valley is a challenge even for fresh graduates, not to mention the hardships faced by lower income families and non-skilled workers.

According to a recent survey conducted by JobStreet.com to see how fresh graduates cope with the exorbitant costs of living in Malaysia, it has revealed that the average basic monthly salary for fresh graduates is RM2,500. Of which, 77% of them said that their salary does not leave them with any savings after spending on essentials.

When asked what these essentials were, 63% of respondents said car and study loans were the major commitments. They further mentioned that transportation cost is also among their top expenses, with fuel prices becoming increasingly expensive. Furthermore, according to the survey, it also showed that 87% of them did not have a side income.

Young, working and most probably single adults starting out in KL will find it hard to resist all the lifestyle attractions that a big city has to offer. However, it is possible to balance fun and financial prudence in KL by looking for inexpensive yet fulfilling ways to enjoy all that the city has to offer.

First of all, you have to be completely honest with yourself and figure out what you define as things you absolutely can’t live without or cannot get out of paying as opposed to additional financial needs like recreation, investments and entertainment.

“With the average salary within the range from RM2,200 to RM2,500, fresh graduates must have a careful budgeting; they must know their financial ability to avoid overspending”.

“They must first clearly identify and differentiate between the necessities and wants. Don’t lead a lavish lifestyle and know the limits. Instead of buying a car and house in the initial years of working, they should opt for other alternatives first. We encourage them to use public transportation as this directly helps them to cut down their monthly expenses, so that they will have more for saving,” he pointed out.

When asked whether the current market salary rates for fresh graduate is reasonable, he said, “With the implementation of Goods and Services Tax (GST) next year, I strongly believe the current monthly income for fresh graduates should be adjusted accordingly." Nevertheless, any adjustments will probably be decided by market forces of labour supply and demand because the cost of daily necessities is expected to increase with the implementation of GST.

Malaysian Digest also spoke to Surinder Kaur, 40, a financial planner from I-MAX FINANCIAL – a financial advisory firm regulated by Bank Negara Malaysia and Securities Commission on the matter.

When asked whether RM2,500 is enough for a fresh graduate, she said, “It is fundamentally a very subjective topic as it depends entirely on the lifestyle of the fresh graduates themselves. From my point of view, I would say the average monthly salary is not really enough for a fresh graduate to live comfortably in the city due to the increasing costs of living,” she said.

“In order to alleviate the problem (financial burden), I would suggest them to start saving, invest and reduce unnecessary expenses. They should takes up odd jobs during weekends to support their main incomes, adding that being a part-time tuition teacher, examination invigilator, call center operator and even multi-level marketer is not a bad choice to make a passive income,” she remarked.

Citing examples, she said investment in stock market and unit trust (a form of collective investment) are wise investment for fresh graduates. However, it requires careful consideration beforehand; they must know their own abilities, adding that the ideal age to invest is between 27 and 29.

Big City, Small Budget: Needs Vs Wants

Learn how to distinguish between wants and needs will help you to spend wisely. PIC: www.debtfreeindubai.comMeanwhile, Malaysian Digest went to the ground and spoke to Coddy Ong Chi Fook, 24, a fresh graduate with a degree in Logistics Management to get a first-hand experience. He is currently working as a Procurement Executive in an engineering and construction company.

Coddy’s gross pay per paycheck is RM2,500, including allowances, overtime pay and other amounts. After the deductions for Employment Provident Fund (EPF) and SOCSO, his actual take-home pay is RM2,225.

When asked on his tips on monthly expenses, he admitted that, “It is difficult to put aside for saving, given the high cost of living nowadays. Setting a target for monthly or quarterly savings is nearly impossible as almost everything costs you more today, let alone disposable income.”

“In order to cut down my monthly expenses, sometimes I would choose to commute to work. This helps me to reduce my expenses for petrol and highway tolls so that it wouldn’t bust my budget (also to avoid the hours stuck in traffic jams), adding that just by looking at the high rental rates, expensive daily goods and increasing toll rates nowadays are enough to get you a tension headache.

“Every so often I will cook at home or eat at fast food joints which are my favorite. When it comes to spending, the ability to resist the temptations is important. A wise personal budget is something a fresh graduate must have to survive in KL as this helps them to avoid spending on luxuries like mobile data subscriptions, buying branded bags and travelling,” he laughed.

While you make plans to carve out your career path or start climbing your way to the top of the corporate ladder, you will still have to survive on your entry level salary which is decided by market forces. During your early working life in KL, survival mode might seem to be all you can do but it is better to view it as a learning experience, learn to find enjoyment while still paying your rent and being able to afford food.

By practicing frugal-living habits and a lot of discipline, it is still possible to afford some discretionary expenses for yourself like a budget holiday or nights out without running up a huge credit card bill.

All in all, as KL climbs up the ranks of the world's most-expensive cities, it is indeed very hard to come to terms with the fact that living in an expensive city like KL means forking out more money to live. Hence, it is important for the city folks - fresh graduates in particular - to fit budget to that expectation in order to tackle the higher costs of living head-on.